Dubai: Do you shop at a supermarket? Or order all the grocery needs online? Or is that through a ‘dark store’?
Dubai’s daily/weekly consumer needs will increasingly be met through the dark store concept as well, where shoppers place orders online or through an app – and have these delivered through a dark store nearest to them. Careem, more known for its ride and food delivery services, plans to expand its network of dark stores to cover 90 per cent of Dubai’s population needs within the next few months. (The orders need to be placed through the ‘Quik’ feature on Careem’s ‘super-app’.)
In short, Careem is going head-to-head with hyper- and supermarket chains and the smaller neighbourhood grocery stores alike. There’s one difference – consumers will not be visiting these dark stores, but will order in all their needs. With the promise that delivery will be done within 60 minutes.
This then is the world of ‘Q-commerce’, where quickness of delivery is central to the offering. “Supermarkets are almost our primary competitor – what we want to do is get shoppers in Dubai ordering all their daily/weekly needs online rather than spend a couple of hours each weekend at a supermarket,” said Chase Lario, General Manager of Grocery for Careem, which is part of Uber.
“What we have is 80 per cent of what users’ daily needs and then it becomes all about how soon can we bring that to them. So, rather than 20 varieties of toothpaste, we have the three of the most popular brand.”
These locations are thus only set up to service customer requirements, but not have to host them like restaurants or cafes do.
Same with dark stores in the grocery delivery space - they stock all the high-on-demand stocks and have them delivered once the orders come in.
Be in all neighbourhoods
Currently, the Careem network of dark stores – of 2,000-4,500 square feet and stocking around 3,500 products – cover 40 per cent of the Dubai population. In two to three months, that will be scaled up to 90 per cent coverage. The same tactic will be followed in other Gulf cities, and by end 2023, the plan is to have 100 such dark stores, all of which will be owned by Careem.
Most shoppers in the UAE expect products delivered the next day, and 20 per cent want products delivered to them the same day they order them. As a result, MENA's quick-commerce market is now big business, estimated to be valued at $47 billion by 2030. That’s why we are seeing major players enter the quick-commerce field offering 15-minute deliveries for groceries, thanks to new fluid fulfilment models and dark stores.
Others join in?
Most of the bigger hypermarket chains already offer delivery services on online/app orders. Market sources say that quickness of delivery will be the next intensely fought area that physical supermarkets will compete against the likes of Careem and any digital platform engaged in Q-commerce. “We have LuLu getting aggressive with its ‘hot meals’ delivered to wherever the customer is,” said a retailer. “Using the same delivery process, LuLu or the likes of Carrefour can easily speed up on regular orders.”
According to Careem estimates, the online grocery market in the UAE grew around 50 per cent last year and could generate $1.6 billion by end 2022. “But only 7.8 percent of the country’s entire grocery sector has been made available for online orders,” according to the company.
“For now, Careem will own and operate the dark store network,” said Lario. “We are open to partnership opportunities, where others could operate certain locations.
“One thing will not change – the compactness of the dark stores. We are well aware that traditional supermarkets because of their size are not designed for logistics, especially quick-service ones.”
For sure, the coming weeks and months will throw a lot of light on how fast the dark store concept is picking up.
